Convergenomics Gower [2010]

crunchkingofprussiaBiotechnology

Dec 6, 2012 (4 years and 9 months ago)

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Convergenomics

Gower [2010]

Sang M. Lee

David L. Olson


Synergistic combination of ideas or objects for new
contexts


Enabled by digital convergence, ubiquitous computing

TRENDS


Networked global economy


Open


Wal
-
Mart; IBM; Nike


Digitization


Moore’s Law


computing power doubles every 18 months


Metcalfe’s Law


Value of a network increases with square of number of users


Coase’s

Law


As transaction costs decrease, firm complexity diminishes


Firms tend to expand until

marginal cost of internal transactions = external marginal cost

Friedman (The World is Flat)


THREE CONVERGENCES


New players
(through global access)


BRIC


New playing field
(Web economy)


Global warming


Green emphasis


Cultural conflicts


Ability to develop new ways

Megatrends


Energy supply


Peak Oil


Global warming


Complexity


Unintended consequences


Globalization


Japan; Asian Tigers; BRIC


Digitization


Enterprise systems


Paradox: More Integrated Systems ˃˃ Fewer Systems People


DEREGULATION/PRIVATIZATION


Home mortgage crisis


COMMODITIZATION OF PROCESSES


Software as a service

Convergence Revolution

1
st

Wave

2
nd

Wave

3
rd

Wave

Industry

Agriculture

Industrial

Knowledge
Service

Economic

Regional

National

Global

Competitive

Advantage

Economy

of
Scale

Economy of
Scope

Economy of
Expertise

Economy of
Convergence

Primary
Focus

EXPLOITATION

EXPLORATION

Convergence

Components
/Products

Functions

Organizations

Technology

Industries

Bio
-
artificial

systems

Economies

Evolution & Organizational Innovation

LEVEL

CONVERGENCE LEVEL

PURPOSE

1

Component/Product

Product/Service innovation

2

Functional

Process innovation

3

Organizational

Value chain innovation

4

Technology

Technology value

innovation

5

Industry

New industries

Customer value innovation

6

Bio
-
Artificial

Molecular

economy

New Products/Processes


Component/Product convergence


iPad
, Smartphone


Functional convergence


BPR


Matrix organization


Temporary supply chain linkages

E
-
Globalization


Develop Corporate Global Mindset


Build Global Competitive Advantage


AGGREGATION


Seek economies of scale & scope


McDonalds, IBM, Microsoft


ADAPTATION


Maximize local relevance


Mini
-
IBMs by country, Google China


ARBITRAGE


Exploit differences in national, regional markets


US Headquarters
-
Chinese factories
-
Indian call centers
-
US retail


Organizational convergence

Technology Convergence


BIOTECHNOLOGY


Drugs


convergence of pharmaceuticals, agriculture,
chemical


Neural technology


convergence of biology, computer
technology


MRI/PET scanning


convergence of engineering, biology


NEURAL SCIENCE


NANOTECHNOLOGY


Evidence:


Cell phones


convergence of internet access, music,
photography, telecommunications


Microelectromechanical

systems (MEMS)

Industry Convergence


Two or more previously distinct industries
become direct competitors or cooperators


Apple vs. music distributes


Walt Disney


travel convention


FUNCTIONAL


Products of 2 industries linked


PCs & TV


COMPLEMENTARY


Multiple objects of value from 1 location


Travel & lodging (air tickets & hotel rooms, rental cars)


Commercial & Investment banking (post
-
Glass
-
Steagall
)

Industry Convergence Examples


News


Newspapers


disappearing


Network TV swamped by Cable Networks


CNN, ESPN,
directTV


Telecom


AT&T breakup


EDUTAINMENT


Education & entertainment


INFOTAINMENT


Information & entertainment

Biological & Artificial System
Convergence


Application of
microtechnology

to business


MINIATURIZAATION = computer chips, health care, gene splicing


VISUALIZATION


X
-
ray, material chemistry


MANIPULATION


virtual reality & tactical feedback


EVALUATION


partition test medium (genome project)


Biotechnology


Genetic modification


US/European debate


Nanotechnology


The science of the very small


SINGULARITY


Ray Kurzweil (2005)


Computers surpass human knowledge

Information
Technology Support


Technology enables globalization


The Web


Cell phones


Enterprise information systems


Supply chain support systems


Competitive advantage from:


Creating & selling new knowledge & ideas

Supply Chain Coordination Systems

System

Description

Applications

Problems

Traditional

Independent inventories

Communication by purchase
order

All types of business

Bullwhip

ECR

Independent inventory
management, sharing
information electronically

Grocery



Distorted data can be
counterproductive

Fast orders but slow
replenishment

VMI

Vendor
-
managed inventory
downstream (channel
coordination)

Procter & Gamble, Wal
-
Mart

Groceries

Need good data visibility,
predictability

Need compatible systems,
trust

Doesn’t work as well if
獵bst楴畴e猠r敡摩汹l
av慩污扬e

CR

Automatic replenishment
based on real
-
time data

Forecasting

Wal
-
Mart

Improved customer
service levels with
better inventory
turnover

Manufacturer can’t
predict special retail
events, excess inventory
shifted from retail to
upstream

CPFR

More complete data sharing,
enabling vendor forecasting
of downstream demand

Joint planning

Drug, grocery, apparel

Warner
-
Lambert, Wal
-
Mart, SAP, Manugistics

Nabisco/Wegman Foods

Boeing/Alcoa

Need compatible systems

Difficult to keep up in
dynamic market
-
driven
demand

Innovation Through
Open Systems


Web 2.0


Openness, participation, collaboration


Service oriented architecture


Strategy to turn applications & information
sources from different organizations into SERVICES
accessible via Web


IBM: On Demand Business


Hewlett
-
Packard: Adaptive Enterprise


Dell: Blade computing

SOA & New Products


iPod


Banking


Salesforce


Automate forecasting processes in CRM


Provide open but secure system


Bank of the West


Enabled access to software to better identify
seasonal traffic


Wal
-
Mart


RFID linkage

Open Source Development

Red Hat
[2009]: Can save by:

1.
Enabling use of commodity hardware rather
than proprietary machines

2.
Avoids maintenance contracts

3.
Greater functionality, reliability, performance

4.
Faster learning curve, available support tools

5.
Avoid vendor lock
-
in

6.
Reduce need for security consultants & tools

CONFENIS 2010 Natal

Open Source ERP/EIS


Jaisingh et al. [2008]
: OSS ERPs can be
customized to modify code, gain competitive
advantage


Serrano & Sarriegi [2006]
:
OSS ERP benefits
:


Increased adaptability


Decreased reliance on single supplier


Reduced costs

CONFENIS 2010 Natal

Open Source ERP Products


Compiere


OpenMFG


Open for Business Project


Tiny ERP


Web ERP


Open Office


OpenBravo


OpenPro

Sourceforge.net

listed over 1,000 ERP projects May 2009

OPTION FOR SMEs

CONFENIS 2010 Natal

Strategic Innovation


Applying new convergence developments to business
opportunities


TYPES OF INNOVATION


Improve products or services


Speed, customization, aesthetics


Improve value chain processes


Lower cost, improved quality


Continuous improvement


Participation by customers, producers


Strategic


New ways of doing old tasks


SOUTHWEST AIRLINES


IKEA

Convergence Evolution


Component/Product
Convergence


Clock radios, cell phones, Amazon’s Kindle


Functional
Convergence


BPR


Dell’s value chain, McDonalds’ food delivery


Organizational
Convergence


Supply chains


Wal
-
Mart, Nike, Dell


Technology

Convergence


Nanotechnology, biotechnology


Industry
Convergence


Combining industries


Apple iTunes, Health Tourism


Open
-
source
Convergence


Web 2.0, open source ERP


Biological & Artificial Systems
Convergence


Miniaturization


gene splicing, molecular biology, MRI

CONCLUSION


The world is flatter


Widening economic & digital divides


Convergenomics

brings
new business models
& opportunities


Strategic innovation required
to survive